Action for Breach of Insurance Contract Involving Whether Fidelity Bond is an "Asset"

By FindLaw Staff on June 7, 2010 9:20 AM

FDIC v. Great Am. Ins. Co., No. 09-1052, concerned an action for breach of an insurance contract. The court of appeals affirmed summary judgment for defendant, on the ground that the district court erred in ruling that the fidelity bond at issue was not an "asset" under 12 U.S.C. section 1823(e), but to honor the FDIC's position and allow it to recover would effectively strike the rescission clause from the bond.

As the Court wrote: "The following facts are not in dispute. In 1999, Connecticut Bank of Commerce ("CBC"), having assets of approximately $89 million, entered into a Purchase and Assumption Agreement (the "P&A Agreement") to acquire MTB Bank ("MTB"), a New York bank with approximately $299 million in assets. CBC purchased substantially all of MTB's assets, including its factoring unit. This transaction required Federal Deposit Insurance Corporation ("FDIC") approval, which MTB sought on August 4, 1999 and obtained on February 5, 2000. At the time MTB and CBC entered into the P&A Agreement, MTB had a 15-year insurance relationship with Lloyd's of London and was covered by a Lloyd's fidelity bond set to expire on June 30, 2000."

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